The following note was added on 1st April 2020 – The FCSA is seeking clarification from the government regarding agency workers (including umbrella) and the Coronavirus Job Retention Scheme. Please click here to see what you can do to help.
In response to the coronavirus pandemic, the government has unveiled plans to help support the UK’s workforce. While we welcome the Coronavirus Job Retention Scheme, there are still plenty of unanswered questions about how the legislation will work – from both an employer’s and ‘furloughed’ employee’s perspective.
What is the Coronavirus Job Retention Scheme?
While there is still a lot of finer detail to be confirmed, here is what we know so far about the Coronavirus Job Retention Scheme:
- All UK businesses are eligible for support as part of the scheme.
- A ‘furloughed’ worker is an employee who is unable to have their salary covered by their employer during the coronavirus outbreak due to financial constraints. As a result, they have not been made redundant, but their role has effectively been put on hold, without pay.
- The scheme is aimed at employees who receive PAYE, meaning they have tax and National Insurance Contributions (NICs) taken at source. This includes temporary workers, umbrella workers and zero-hour contract workers.
- The Coronavirus Job Retention Scheme is a fast-tracked legislation designed to support employers and ‘furloughed’ employees. To summarise, the new scheme will see the government pay 80 percent of furloughed employee salaries, up to £2,500.00 net – per month. This therefore means that any employee earning up to £40,000 will be able to earn 80 percent of their salary – paid for by the government.
- The 80 percent government payments will be based on historical payslips.
- Whilst the scheme is positive news to both businesses and employees, infrastructure is not in place yet – and it might not be for several weeks. This means there could be a delay in seeing it rolled out.
- The scheme can be backdated to 1st March and will initially run for three months. This may well be amended in the next few weeks or months.
- Contractors working through a Personal Service Company (limited company) are not covered by the government scheme that has been created for the self-employed. However, they are able to benefit from the Coronavirus Job Retention Scheme. If you are contracting through a PSC, you can claim some of your PAYE salary for three months, starting from 1st March (80 percent) – if you are unable to work. There are also additional benefits available to PSC contractors, including additional time to settle your corporation tax, pay VAT and cover your personal taxes.
How will this help workers using an umbrella company?
At the moment, it appears that all UK businesses can use this scheme to help them and their ‘furloughed’ employees. However, there are still plenty of pieces of information missing. Therefore, Umbrella Company UK is unable to take an official stance on this until we know more. As soon as more information is made available, we’ll let you know.
Our advice to contractors affected by the coronavirus
We know it isn’t easy, but please hold tight and await further clarification from the government. As soon as more information is available, Umbrella Company UK will do whatever we can to support you. In the meantime, it is impossible for us to implement a plan until the guidance from the government is made clearer and procedures are set in stone. We hope to have more clarification over the coming weeks.
As we have mentioned above, as soon as more information is made available, we’ll share it with you. Please stay safe and continue to follow the guidance set out by the government. By working together as a nation, we can help beat COVID-19.